Decline in industrial growth will impact exports: FIEO

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SME Times News Bureau | 13 Sep, 2011
Exporters' body FIEO Monday cautioned that the recent decline in manufacturing and industrial growth will adversely impact exports.

FIEO President Ramu S Deora said that though Indian exports are now less reliant upon Western demand, having diversified significantly towards other markets. Still, nearly one-third of total exports continue to head towards the US and EU.

Also, he added, Asian demand – of which China and ASEAN account for a 17% share in India’s exports - is also exhibiting a slow-down. G-7 industrialized nation have also shown a slow-down except Brazil and China, he pointed out.

The FIEO chief said even, China, shows both official and private manufacturing PMIs trending down for the past four months Likewise, the manufacturing PMI for South Korea slipped below 50 while that for Taiwan dropped further to 45 in August. This is indicative of the larger picture and it appears that World Trade Organisation’s estimate of 6.5% trade growth in 2011 might not be realized.

As per ofiicial data released Monday, industrial growth fall to abysmal level of 3.3% in July vagainst 9.9% in July last year with manufacturing output falling to 2.3% from 10.8% in the same period last year, capital goods falling to to 15.2% (from 40.3% in the corresponding period) and other parameters on mining/production of intermediate goods/consumer durables exhibiting a dangerously declining trend which requires urgent policy measures to put the economy back on track.

FIEO said that the recent decline in factory output in July is clearly indicative of the sluggishness and inertia in the economy.

In this scenario, Deora appealed to the government to announce immediate reduction in interest rate for exports, re-introduction of interest subvention and liberal drawback rate so that exporters can book order for next quarters.